The greenback may fall by another 15% against rival currencies by mid-2024, an investment services company says
The US dollar could weaken by as much as 15% against major world currencies over the next 18 months, as inflation continues to cool, allowing the Federal Reserve to loosen its monetary policy, according to Eurizon SLJ Capital.
A research note released on Tuesday by the firm’s chief executive, Stephen Jen, said the US Federal Reserve is likely close to – or already beyond – peak hawkishness, meaning that rate cuts are on the horizon.
The Fed’s nine previous hikes, in addition to the tighter credit conditions caused by the US banking crisis, already suggest inflation is trending to the downside, he concluded.
“We expect US inflation to continue to decline at roughly the same pace as it rose in 2021 and the first half of 2022: historically, there has been scant evidence of downside stickiness in inflation, even if there is evidence of downside price and wage level stickiness,” Jen wrote in the note, cited by Business Insider.
“The already subdued level of economic activity in major parts of the world will, ironically, likely prevent global demand from collapsing,” which points to a significantly weaker US currency, the analyst argued.
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The US Dollar Index, which measures the strength of the dollar against a basket of rival currencies, has slipped 2.46% over the last four weeks after a 7.9% gain in 2022.